Grauer & Weil (India) Ltd. (Code: 505710) Rs.115.80 strong buy

Incorporated in 1957, Grauer & Weil India Ltd. (GWIL) is the flagship company of the Growel Group, which is a metal
finishing house that offers an integrated package of chemicals, plants, effluent treatment systems and waste recovery
techniques from spent solutions. In association and collaboration with renowned international partners like Serfilco -
USA, Goema - Germany, Nippon Denro Shamrock - Japan, Hawkings - UK, Manz Galvano - Germany, Utikal - Germany,
Sidasa - Spain and such others, GWIL is an undisputed leader in the electroplating market with almost 50% market share.
Its business model is divided into the following two segments:
Chemicals: GWIL produces more than 600 different metal finishing chemicals spanning the widest range of applications
for surface treatment. In addition, it also offers a variety of intermediates used in the manufacture of plating chemicals.Engineering: In this division, it offers a wide range of electroplating plants and equipments - from conventional
standalone units to fully automatic programme controlled systems; integrated with effluent treatment, waste water
recovery and re-circulation procedures. Be it for general plating, plating of printed circuit boards, continuous plating lines
or pre-treatment/cleaning machines, the company’s production programmes cater to all type of requirements for surface
Currently, the company is operating through its four plants located at Vapi in Gujarat, Pune in Maharashta, Dadra and
Barotiwala in Himachal Pradesh. It is setting up a fifth plant with a capacity of 4000 MT in the tax-free zone of Jammu,
which is expected to become operational
shortly. It also has a full fledged R&D
division equipped with sophisticated and
analytical equipments and highly
qualified/ experienced technocrats. In the
near future, the company is looking at
diversification avenues in allied fields of
surface treatment/finishes e.g. pre-
treatment processes as also oils &
Apart from its core business enunciated
above, GWIL has also ventured into real
estate development since late 2003 and
has set up a 125,000 sq. ft. hi-tech mall
(Growel’s 101) constructed on its 10 acre
surplus land in Kandivali, Mumbai. As of
today, the mall has become very popular
and boasts of high foot falls for shopping
and entertainment. The space has been
leased out to Big Bazaar (Pantaloon) and
Cinemax for which the company earns a
pure rental income of more than Rs.5 cr.
at the rate of around Rs.35 per sq. ft. per
month. After tasting the success with its
first real estate venture and to cash in on
the burgeoning lease rental prices, the
company is aggressively constructing the
Phase-II comprising a huge area of
300,000 sq. ft. This is expected to be ready
by this calendar year 2008 and will house
large and small retail outlets, department
stores, designer boutiques, fine dining
restaurants, food courts, banquet
facilities, kiddie corners, beauty salons,
health care centres, business hubs, ATMs,
a cyber café, amphitheatre and other
specialty kiosks. Importantly, Phase–II is estimated to be leased out at an average rate of Rs.100 per sq. ft. per month.
Thus, the company may generate additional rental revenue of around Rs.30-35 cr. from Phase-II. After completion of
Phase II, GWIL intends to develop the last phase i.e. Phase–III, which will be another 300,000 sq. ft. of area. So by early
2010, the company may boast of developing and earning from 625,000 sq. ft. of Shoppertainment Mall. Apart from the
rental income, the company is also expected to get good revenue from various other promotional activities,
advertising/branding inside the malls etc. 
For FY07, GWIL is expected to report total revenue of Rs.185 cr. with PAT of Rs.13 cr., which leads to an EPS of Rs.10 on
its current equity of Rs.12.80 cr. But with the Jammu plant operational and Phase-II, the company is expected to register a
topline of Rs.220 cr. with a bottomline of approx Rs.20 cr. i.e. an EPS of Rs.16 for FY09. Assuming there is no equity
dilution; the company has the potential to post an EPS of Rs.22 for FY10. Meanwhile, at a reasonable discounting by 12
times against its FY09 earning, the scrip can shoot up to Rs.200 within a year. However, only long-term investors are
advised to buy this scrip as any delay in construction of the mall may restrict the short-term rise in its share price 

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